Economics

Economic challenges ahead

This week, I’ve focused on the BCUC reports and will write more about Site C later. I also looked at Statistics Canada employment reports. I don’t put a lot of weight on month to month changes because the chance of statistical error is high but a little softness in job creation seems apparent.

Labour market survey results for January 2015 through September 2017 are reflected in these charts:

There is a reduction in job numbers in the last part of quarter three 2017, although minor. Uncertainty in real estate markets and the slight interest rate bump (with fears of more increases coming) are responsible for a good part of this.

Much of our economic boom has been driven by residential construction, partly facilitated by foreign money but also by homeowner equity gained as prices escalated. Boosts in real estate values encouraged owners to borrow for residential renovations, car purchases and all classes of durable and non-durable consumer goods.

That sort of spending tends to peak and decline as people grow nervous, fearing the bubble will burst and historic asset values will not be sustained. Bankers have been under pressure to reduce financial risks and that introduces tempering factors in lending for mortgages and lines of credit.

Another problem affecting employment growth is housing affordability. I live on the North Shore and see signs everywhere offering jobs. Hospitality businesses indicate that some are cutting back hours of service for lack of workers, particularly people at the junior levels.

I’ve had conversations with local government people around the province and frequently hear concerns expressed that a lack of affordable housing hinders economic growth. From people in trades, I’ve listened to complaints that the quality of available workers is a problem grown worse over time. This may be from lack of suitable training or from changing attitudes of Canada’s young people toward employment.

Big money earned through illegal activities might have a greater impact than we care to admit and economic stimulus from criminal enterprises may explain why the former government hesitated to enforce certain laws.

Over a long time, BC has seen a reduction of jobs in goods producing sectors, particularly in manufacturing, and a significant increase in service sector jobs. I expect we will have to rely more on innovative small and medium sized enterprises for future job growth and that our new government ought to provide increased encouragement to SMEs.

The Clark government was dazzled by capital intensive proposals that didn’t necessarily provide a good number of long-lasting domestic jobs. Megaprojects were driving debt and contractual obligations to amounts far beyond levels experienced elsewhere in Canada.

Busts inevitably follow booms. It will take careful management to grow the economy in healthy ways that benefit all citizens.

Categories: Economics, Labour

7 replies »

  1. review raw log export to enhance value added goal.
    review IT contracts in BC.
    review IPP contracts as they are priced higher than open market rates -BC is losing sevel hundred million dollars a year by this policy.?
    review P3 contracts also.?
    Hypocracy=banning nat gas ,to use in BC ,on large scale for electricity,.ie burrard thermal, yet trying to sell overseas to do exact same thing.Was made politically forbidden to do so.In case of emergency we will just have to rub 2 sticks together.Best not to rely on just dams for power.Puerto Rico is using gas turbines for their emergency.

    Liked by 1 person

  2. Sadly the economic rot started with the Clark NDP, when Clark and McPhail sold out to Bombardier Inc. and SNC lavalin with the LRT Broadway Lougheed Rapid Transit Project, ending with the SkyTrain Millennium Line.

    This one project devastated transit planning in the region and empowered the likes of City of Vancouver, TransLink, and the industrial/global corporations to believe that BC politicians could be bought.

    Gordon Campbell continues this practice of corrupt government with the sell off of NC Rail, BC Ferries, and much much more, to long time political friends.

    So powerful was Campbell’s cabal, he had Rafe Mair removed from the airwaves.

    But Campbell went too far with his double taxation and downloading taxes onto the poor and he was forced to resign.

    Then we got Clark, the supreme grifter, who made “Pay to Play” part of BC’s political lexicon; where illegal money laundering was made legal (well sort of) and corruption was as open and as common as a Sunday Church service.

    Now we have Horgan, but he is being advised by one Geoff Meggs, who excelled at the BC school of Clark/Campbell/Clark grifting. I am not holding my breather for the gust of fresh air to waft through Victoria.

    Methinks the same BC storey is being played out in just another sad chapter of a sad book that very few read.

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    • The NDP has never been anything to compare to BC Liberal corruption.
      BC Ferries was never sold to anyone. Even the bogus BC Ferries Services Inc is 100% publicly owned.
      It is neo-right trope to equivocate that all politicians are the same.

      Like

      • Let me say this, Clark and McPhail kow-towed to Bombardier and SNC Lavalin with the Millennium Line because Bombardier and SNC knew if the Millennium Line was not SkyTrain, it would be a premature end to the proprietary ALRT/ART light-metro.

        For those who witnessed this, very few have ever trusted the NDP again and lest we forget, the very next election, the NDP were reduced to two seats.

        To call me a neo right type is laughable, but with not political ax to grind I can give a politically unbiased overview of the last 27 years.

        The NDP today, must shake off this Albatross, which will make many of their political friends extremely unhappy, starting with the now almost $4 billion subway under Broadway which will enrich SNC, provide some income for Bombardier, yet increase transit fares and forcing new taxes on the beleaguered taxpayer in metro Vancouver.

        Does Horgan have the jam to do it?

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  3. Pretty much says it all. I have grave doubts about the ability of the government to be able to do anything anymore. The last 16 years of neglect and debt loading have over-burdened BC taxpayers. In fact, it can be likened to burning a candle at both ends. I wonder if BC will undergo the same austerity methods as Greece or be subjected to increasing taxation (and social cuts). The NDP was not the carrier of this nightmare, but will assuredly be the one forced to deal with the repercussions of ignorant fiscal policy during the last decade.

    Liked by 1 person

  4. Norm says, “Big money earned through illegal activities might have a greater impact than we care to admit and economic stimulus from criminal enterprises may explain why the former government hesitated to enforce certain laws.”

    Without naming names or locales: I know a BCH power services planner who had a request from a customer for more power for his rural property. BCH man asked what it was for and the customer said for a “shop.”

    The customer wanted more power than a typical Walmart uses, so BCH man was suspicious.

    “If this is for a grow-op, that’s fine. We’re not allowed to report you…”

    “Yeah… it’s for a grow-op…”

    Rather than stealing the power, the guy was totally up-front in wanting to pay the going rate. Refreshing honesty, from a criminal!

    Like

  5. The rot is so deep we will need at least a decade to make things right.

    The BC Securities Commission is charged with the responsibility to apply financial penalties against those guilty of investment fraud and to collect the funds from the perpetrators.

    $510 million — amount of penalties assigned for fraud in BC over the past decade
    1.6% — amount collected by BC Securities Commission

    While…
    18% — the collection rate for similar fraud in Ontario and Alberta
    20% — the collection rate in Quebec
    60% — the collection rate in the USA

    Partly because…
    234 — the number of staff working at the BC Securities Commission
    1 — the number dedicated to fine collections

    *Vancouver Sun, November, 2017

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